* Bonds issued by Suleiman Kerimov and partners
* Exchangeable into equity stake now worth $3 bln
* Signals resources sector open to strategic investors -
* Uralkali shares down 3.6 pct, underperform MICEX
By Polina Devitt
MOSCOW, Nov 9 The main owners of Russia's
Uralkali have sold bonds exchangeable into shares
worth about $3 billion in a deal that could give a Chinese
sovereign wealth fund a stake in the world's largest potash
miner by output.
Uralkali said on Friday the bonds had been sold to Chengdong
Investment Corporation, a subsidiary of China's CIC,
and to VTB Capital, a subsidiary of the country's No.2 bank VTB
The bonds are due in 2014 and exchangeable into a 14.5
percent stake in Uralkali worth more than $3 billion at current
prices. China's CIC could exchange its bonds into a 12.5 percent
stake and VTB to a stake of 2 percent.
The bonds were sold by four core Uralkali shareholders, led
by tycoon Suleiman Kerimov, who between them own 45.3 percent of
Sources familiar with the deal said it showed that Russia's
natural resources sector was open to strategic investment from
its fast-growing Asian neighbour, a major buyer of the mineral
"Russia sits on extremely interesting opportunities in
resources," one said, adding that such a deal had only become
possible thanks to a significant improvement in bilateral ties
in recent years between Moscow and Beijing.
The Uralkali transaction is the second involving CIC and VTB
Capital in Russia this year, after the pair in May bought 7.5
percent in Polyus Gold, Russia's largest gold producer,
for $635 million.
VTB Capital advised Uralkali, a source said. The bank tops
the league table for advising on deals with Russian involvement
this year, according to Thomson Reuters data, advising on $63
billion worth of deals.
Uralkali, which has seen its market value gain 11 percent in
the last six months to $22 billion, did not specify the value or
terms of the exchangeable bond transaction.
Kerimov led a concert party of investors that took control
of Uralkali in 2010 and later merged it with fellow Russian
potash producer Silvinit, creating a company with the scale to
rival Canada's Potash Corp.
Kerimov was the largest Uralkali shareholder with 18.09
percent stake as of Aug. 13, according to Uralkali's web site.
Filaret Galchev owned 10.85 percent, Zelimkhan Mutsoev 8.37
percent and Anatoly Skurov 8.01 percent. A fifth core
shareholder, Alexander Nesis, owns a stake of 9.94 percent but
did not participate in the bond deal.
Two special purpose vehicles issued the bonds. Wadge
Holdings Ltd, which owns 12.5 percent of Uralkali, sold them to
CIC. Wadge is owned by Kerimov, Galtchev, Mutsoev and Skurov.
A second entity, Fenguard Ltd, owns 2 percent of Uralkali
sold bonds to VTB Capital, in which CIC is also a minority
investor. Fenguard is beneficially owned by Skurov.
Another source close to the deal said the prospective entry
of a long-term equity investor would minimise the risk that a
large sale of stock could depress Uralkali's share price.
The stock nonetheless fell by 3.6 percent, underperforming
the benchmark MICEX index.